Sunday, 18 December 2016

My friends Ben and Sam have both written posts about which articles and books have influenced their thinking. There’s not a whole world of difference between us in terms of our core beliefs but I thought I would write a similar list. This is pure indulgence on my part, so if you're not interested in my views, this will bring you no enjoyment. In addition, because I am incapable of writing anything short, I’m going to provide a bit of an explanation about my choices and how it interacts with my world view. I have not fully elaborated or provided all the sources for my views - this post is supposed to be a list of book that have influenced me, rather than a full bibliography of everything that supports the views below and I don't want to take the piss much too much.

These three books are responsible for my views about the general progress of the world. There have been great rises in wealth, the decline in poverty, the rise of liberal democratic political systems, the historic declines in crime and war, and the incredible achievements on a range of social issues (sexual rights, womens’ rights, gay rights, and now, hopefully, transrights). It’s the source of “Mugwump’s Law” (not a thing) which is that they more you want to change the status quo, the more your views about the status quo are probably wrong.

In a similar vein, The End of History (which I’ll return to below) is part of this belief. The progress we have seen is, at the very least, linked to the economic and political systems we have created in the West and are now proliferating slowly in the world - but is also part of the reason I moved away from being a proponent of democratic intervention. I previously believed, in principle, with the idea of removing authoritarian governments because they were authoritarian. But then I changed my mind - as Mueller (2014) points out in his essay “Did History End? Assessing the Fukuyama Thesis”:

The central policy implication of the experience with the remarkable rise of democracy and capitalism is to suggest that, if trends are on one’s side, it may well be best not to work too strenuously to move them along... efforts to impose them are likely to be unnecessary and can be costly and even counterproductive.... People do not seem to need a lot of persuasion to find appeal in shining cities on hills that are stable, productive, and open even if some of the luster wears off as they get closer.

Incidentally, the other main reason for democratic intervention losing favour with me was the work of Scott Walker. In his 2014 study (“Does Forced Democratisation Work?”) he looks at two types of U.S. democratic interventions: (1) intervention followed by push for democracy (Variant 1) and (2) interventions in autocratic states (Variant 2). In respect of the latter, he finds that 8 of the 14 countries that fit his category, meet the definition of democracy (i.e., a success rate of just over 50%) which isn't too bad. However, the results exclude Afghanistan and Iraq, and the results don't hold when you look at a different measures (Freedom House Scores). Looking at interventions in autocracies (Variant 2), he finds that only approximately 25% of interventions are successful when looking at the Polity IV score.

However, my view is that the aim is not for these countries to become Norway in the short or medium term, the aim is to improve the general score of polities. Here, the results are encouraging. Looking at Variant 2 countries, the average Polity VI score increases from 0.56 in 1989 to 1.11 in 2009. But the general finding is enough to put me off the principle of democratic intervention; I continue to agree with attempts at democratisation following our security and/or humanitarian interventions.

Institutions

But I’ve jumped the gun in starting with my whiggish views. I believe in the importance of liberal democracy - a belief that comes from more studies and books than I can possibly name. So here’s a few particular views and their sources.

Economic Related

The Long Divergence: How Islamic Law Held Back the Middle East - Timur Kuran / Why Nations Fail - Acemoglu and Robinson / Fragile by Design - Calomoris and Haber — Economic Origins of Roman Christianity - Robert Ekelund and Robert Tollison

I was very late to reading about new institutional economics and my primer wasn't Douglas North, but Timur Kuran. His book, which I have provided an overview of here, provides an institutional explanation for why the Middle East became economically retarded. He places importance on the form of contracts, legal institutions like corporations, the (lack of) importance of Islamic restrictions on interest and how all of the aforementioned links with Islamic rules about apostasy, dhimmis and local court enforcement.

This led me onto read more new institutional economic books. One of the greatest differences between me and my ‘Twitter crowd’ is that I believe that democracies provide better outcomes. I have explained the enormous weight of the evidence about how democracies are better are protecting fundamental rights. It is a common refrain that respect for liberal rights and the rule of law are responsible for good outcomes, not democracies. I will explain why I disagree with that view at some point in the future, but new institutional economic provides me with comfort in the view that democracies have better economic outcomes.

Fragile by Design: The Political Origins of Banking Crises and Scarce Credit, a fairly convincing book written by Calomiris and Haber provides one example of why this is the case: democracies generally have more stable banking systems that provide broad credit. This is through a number of nterlinked mechanisms: an autocracy cannot give adequate guarantees that it will not expropriate the assets of bank investors, minority shareholders and debtors. Accordingly, they must ‘compensate the banks investors and depositors for accepting the risk that the banks assets may be expropriated’ (p.33). They do this by providing the banks with rents, commonly in the form of a monopoly right or privileges (p.44).

Banks like these – effectively nationalised or, at the least dependent on the teat of the autocrat – provide scarce credit (because most of the money goes to the autocrat himself and/or because they have monopoly rights, interest rates are high). They are also unstable: both the autocrat and the bank insider’s discretion misallocate and squander resources (by investing in either in the autocrat or the insider’s own businesses). These are all self-reinforcing mechanisms: because credit is not widely distributed, there is no need for the institutions that enforce contracts (this includes the rule of law which is required to independently adjudicate and enforce contracts).

Democracies, by contrast, protect against these risks more consistently than autocratic governments. In much the same fashion, Why Nations Fail (which is, unlike Fragile by Design, a moderately problematic book), provides the same mechanisms for general economic development. The requirement of autocrats to stay in power leads to extractive institutions; inefficient institutions that arise because the autocrats needs to provide rents and privileges to strongmen - to forestall any risk that they take over, and also to provide them with funds. The risk of economic actors becoming powerful is an additional reason why autocrats create a network of inefficiencies.

Just a brief little caveat: I do not believe in pure democratic systems. I believe in liberal democracies: key checks and balances that try to forestall the bad elements of democracy. I think there should be stringent constitutions, courts with the power to strike down laws, an unelected upper chamber, party political leaders should have the ability to control candidates and no matter should be put before the people in a referendum. The electoral failures of Brexit and Trump are failures of gate-keeping and a rejection of trustee models of representation.

The literature on the importance of institutions above has also led to views I have about the political decay that autocracy causes. I have written about how the origins of authoritarianism in the Middle East are internal, domestic institutions (see this post for a collation of this view). This view contributes to my view, explained, below about disagreeing with democratic intervention: liberal democracies rely on a whole host of institutional developments over centuries, the most important of which is civil society.

I am not an anarchist and I am not a libertarian. I believe in the power of the state to carry out certain services, to fund armies, to provide the funds for certain things (such as healthcare or the universal basic income). But, I have a huge scepticism of using the state. The high threshold for governmental action has it sources in much of my economic views. The book that started me on my path to being an economic liberal was Milton Friedman’s Capitalism and Freedom. If I read the book now, I’m sure I’d nitpick and not buy everything but it remains the case that as a 17 year old it had a massive impact on me. The same for On Liberty - I was an ardent defender of Mill throughout my university years: it gave me a respect for limited government that I have yet to shake off.

This suspicion of government power has, like many of my views, been nuanced and tangled by an array of subsequent studies, but the fundamental point remains: the more limited the scope of government, usually the better. In Why Do Governments Fail So Often? Schuck writes about a study by Winston (2006) which looked at pretty much every single study that assessed U.S. federal government programmes that tried to handle ‘market failures’ (in particular, market power, information inequalities and externalities and public goods). He summarises the conclusions:

Thirty years of empirical evidence on the efficacy of market failure policies initiated primarily by the federal government but also by the states, suggests that the welfare cost of government failure may be considerably greater than that of market failure... Some policies have forced the U.S. economy to incur costs in situations where no serious market failure exists, while others, in situations where costly market failures do exist, could have improved resource allocation in a much more efficient manner

... my assessment of the empirical evidence reveals a surprising degree of consensus about the paucity of major policy successes in correcting a market failure efficiently.. Generally, my fundamental conclusions are not influenced by studies that use a particular methodology. In fact, researchers who used vastly different techniques to assess specific policies often reached very similar conclusions (p.52, p.23, p.63).

Schuck carries out a similar exercise in his book. He looks at assessments from Government Accountability Office, the Office of Management and Budget and several leading think tanks from across the ideological spectrum. His results are in line with Winston’s:

We found more than 270 such assessments, some of which will be cited in later chapters. Only a small number of these assessments could be considered positive; the vast majority were either clearly negative or showed mixed results (p.23).

But I’m not a maniac. To briefly explain my ideological evolution: I was a social democrat, I became an anarcho-capitalist, then a minarchist - and since then I’ve made the trip to where I am today: a neoliberal (see Sam’s definition) with libertarian tendencies. The reason I’ve moved back toward the centre is, predominantly, because of the literature surrounding my foreign policy views and the environment. I’ll be talking about the former below, but I want to briefly cover the main book that made me change my mind about being a minarchist: The Silent Epidemic: Coal and the Hidden Threat to Health. In the margin of the following extract, which talks about the effect of the Clean Air Act, I have a hand written note which reads: “we need this!”:

The improvements in air quality were thought to be primarily due to reductions in particulate matter and ozone. In this retrospective analysis, the modeling predicted an annual reduction of 184,000 premature deaths, 674 cases of chronic bronchitis, over 22 million lost days at work, and other outcomes...

The EPA concluded that the total monetized health benefits from the Act during the 20-year period ranged between $5.6 and $49.4 trillion. The central estimate for benefits was $22.2 trillion. During that period, the costs to comply with the act were estimated to be approximately $0.5 trillion. Thus the net direct benefits were between $5.1 and $48.9 trillion, with a central estimate of $21.7 trillion...

By the year 2020 the scenario predicted by the amended Act avoids 230,000 premature deaths among adults age 30 and above each year. The model also predicts avoiding the deaths of 280 infants each year. The monetary value of these two causes was set at $1.7 trillion for adults and $2.5 billion for infants (p.191-199).

The Role of Ideas

Ideological Origins of the American Revolution - Bernard Baliyn / Roads to the Temple - Leon Aron / End of History - Francis Fukuyama

The central role of ideas plays a massive part of my world view. I know its cliche but ideas matter - but the reason why its not so cliche is the tendency for people to give primacy to structural issues like poverty, inequality or culture in explaining historically important events. I have published a review of Roads to the Temple (which you can read here) and explained the implications of this in The Empirics of Free Speech, Part I:

To move on to the causal link between the progress we’ve made in terms of liberal democracy and free speech, Mueller is probably right when he says that

Democracy’s rise has, it seems, essentially been the result of a 200‐year competition of ideas, rather than the necessary or incidental consequence of grander changes in social, cultural, economic, or historic patterns. It has triumphed because the idea that democracy is a superior form of government, ably executed and skilfully promoted—or marketed—at one point in the world’s history, has increasingly managed to catch on.

By way of an elaboration I want to briefly talk about two books. The first is Leon Aron’s Roads to a Temple: Truth, Memory, Ideas and Ideals in the Making of the Russian Revolution, 1987-1991. I have reviewed this book elsewhere but the core idea is that freedom of speech allowed ‘every institution – political economic and social – to be subjected to trial by truth and conscience’ (p.51). It is following this process of self-discovery and criticism that surveys showed ‘solid majorities favour some key features of liberal capitalism’ (p.32-3). It then when people accept ‘alternatives to the current view’ does a ‘pre-revolutionary situation... become a revolutionary crises’ (p.20).

The second is Bernard Bailyn’s Ideological Origins of the American Revolution which focuses on the pamphlets that were ‘the literature of the Revolution’ and ‘convey[ed] scorn, anger, and indignation’ that were ‘probings, speculations, theories’ which ‘were not mere mental gymnastics’ but were they provided the ‘grounds of resistance.’ (p.8, p.18, p.231). Bailyn shows that the American Revolution was

... above all an ideological, constitutional, political struggle... [and] intellectual developments in the decade before Independence led to radical idealisation and conceptualisation of the previous century and half of American experience, and that it was this intimate relationship between Revolutionary thought [as expressed in the pamphlets] and the circumstances of life in the eighteenth-century that endowed the Revolution with its peculiar force... (p.x-xi).

These two books are not quirky artefacts of the historical record.[1]

[1] Fukuyama (1992) provides a more general history which shows the roles of ideas:

‘The critical weakness that eventually toppled these strong states was in the last analysis a failure of legitimacy—that is, a crisis on the level of ideas. Legitimacy is not justice or right in an absolute sense; it is a relative concept that exists in people's subjective perceptions. All regimes capable of effective action must be based on some principle of legitimacy. A tyrant can rule his children, old men, or perhaps his wife by force, if he is physically stronger than they are, but he is not likely to be able to rule more than two or three people in this fashion and certainly not a nation of millions... It is clearly not the case that a regime needs to establish legitimate authority for the greater part of its population in order to survive. There are numerous contemporary examples of minority dictatorships that are actively hated by large parts of their populations, but have succeeded in staying in power for decades.... When we speak of a crisis of legitimacy in an authoritarian system, then, we speak of a crisis within those elites whose cohesion is essential for the regime to act effectively’ (p.15-16).

I think this emphasis on the role of elites to the detriment of force is misplaced but that doesn’t change his core argument that, in the spirit of both Aron and Bailyn, ‘there was a remarkable consistency in the democratic transitions in Southern Europe, Latin America... [With a couple of exceptions] there was not one single instance in which the old regime was forced from power through violent upheaval or revolution... [rather] it was ultimately made possible by a growing belief that democracy was the only legitimate source of authority in the modern world’ (p.21).

This belief in the role of ideas is why I don't think blowback is a thing when it comes to explaining terrorism. But, in the same vein, the lack of specificity from Eustonites when they talk about ideological explanations is frustrating. The more thoughtful people don't talk about the role of Islam in terrorism, but the role of Islamism. But, for reasons I’ve laid out before, I don’t find this persuasive either. The common refrain of people like Majad Nawaz is “if you believe stoning is right, how can Islamism not be linked to violence?” (or something like that). One of the problems with this view is that they then conflate it with critical views about democracy, womens’ rights and views about free speech.

If we’re more specific about ideologies, this criticism falls away. And this brings me to a paper from Fair et al (2012) which looks at the predictive power of Islamism as opposed to “Jihadism” - the results are unsurprising:

…neither religious practice nor support for political Islam is related to support for militant groups. However, Pakistanis who believe jihad is both an external militarized struggle and that it can be waged by individuals are more supportive of violent groups than those who believe it is an internal struggle for righteousness.

I talk about this study and half a dozens showing why Eustonites are wrong in this post. Finally, There’s one other extract which entwines my views about progress and the role of ideas - its from Zack Beauchamp’s review of The Great Escape published in Think Progress. He writes:

it suggests that there’s a third type of innovation, beyond those of science and business, that propels humanity forward: moral advancement… Once invented, moral advancements can’t be contained inside national borders — another similarity between them and Deaton’s technologies. A belief in the fundamental moral equality of persons and the attendant democratic institutions has spread globally. Democracy is the world’s dominant form of government and belief in human rights is increasingly transcending national borders.

Once invented, moral advancements can’t be contained inside national borders — another similarity between them and Deaton’s technologies. A belief in the fundamental moral equality of persons and the attendant democratic institutions has spread globally. Democracy is the world’s dominant form of government and belief in human rights is increasingly transcending national borders.

I consider myself a liberal nationalist - which probably comes as a surprise to some people. The refrain of a nativist that I and people who share my view are ‘rootless cosmopolitans’ has always made me laugh: I love my country and consider it to be a fundamental part of my identity. I have very complicated views about liberal nationalism that I’ll be describing in Part III of my immigration series so for now I’ll just give a few relevant extracts from the above books.

Kymlicka in Multicultural Citizenship: A Liberal Theory of Minority Rights:

…freedom involves making choice amongst various options, and our societal culture not only provides these options, but also makes them meaningful to us. ...societal cultures involve 'a shared vocabulary of tradition and convention' which underlies a full range of social practices and institutions.... To understand the meaning of a social practice, therefore, requires understanding this 'shared vocabulary’ – that, is, understanding the language and history which constitute that vocabulary.

Whether or not a course of action has any significance for us depends on whether, and how, our language renders vivid to us the point of that activity. And the way in which our language renders vivid these activities is shaped by our history, our ‘traditions and conventions’. Understanding these cultural narratives is a precondition of making intelligent judgment about how to lead our lives. In this sense, our culture not only provides options, it also provides the spectacles through which we identify experiences as valuable…

The availability of meaningful options depends on access to a societal culture, and on understanding the history and language of that culture… (p.84)

Kymlicka elaborates on what he means in Politics in the Vernacular:

My basis argument can be summarized this way: modern states invariably develop and consolidate what I call a societal culture – that is, a set of institutions covering both public and private life, with common language, which has historically developed over time on a given terrirory, which provides people with a wide range of choices about how lead their lives…

These societal cultures are profoundly important to liberalism, I argue, because liberal values of freedom and equality must be defined and understood in relation to such societal cultures. Liberalism rests of the value of individual autonomy – that is, the important of allow individuals to make free and informed decisions about how to lead their lives – but what enables this sort of autonomy is the fact that our societal culture makes various options available to us. Freedom, in the first instance, is the ability to explore and revise the ways of life which are made available by our societal culture. (p.53)

In The Limits of Nationalism, Gans says:

People have a fundamental interest in adhering to components of their identity. They have an interest in being respected for their identity and the components that comprise it, or at least in not suffering humiliation or alienation because of it… desires involving objects in which people have fundamental interests must be given special weight in determining the contours of the political order. …such desires are very different from desires involving objects in which people do not have fundamental interests (for example, the wish to spend a vacation on one particular island as opposed to another island)… [With regard to] people ’s interest in adhering to components of their identity, the assumption that it is fundamental has ample support. It is supported by the fact that many people regard themselves as having this interest, especially in relation to their cultural identities (p.43).

Terrorism

Terror and Consent - Philip Bobbitt / The Missing Martyrs: Why There Are So Few Muslim Terrorists - Charles Kurzman

Perhaps no book has had as much of an impact on my views than Terror and Consent. It provides the building blocks for my views about the importance of Western power, the need for carefully managed interventions and the importance of international alliances with autocratic and multilateral institutions. Bobbitt’s book has insights into:

Why the argument that “terrorism isn’t as common as dying from peanuts / fridges / insert your analogy here” are wrong.

Why the nature of terrorism has changed: we’re no longer looking at nation state terrorism, but market state terrorism.

Why the nature of war changing has implications for law enforcement and military strategy (i.e., why domestic police action is not sufficient for stopping terrorism).

To elaborate on that final part, the failure in Iraq between 2003 and 2006 can be attributed to a failure to understand the changing nature of war. Bobbitt correctly attributes the chaos in the aftermath of the war to the inadequate number of troops required; and the de-Baathification of the Iraqi army. From a “law enforcement” only view, it made sense not to send more troops after the regime had been dismantled. But market state terrorists are not conventional armies, they thrive off security vacuums. As Bobbitt explains:

[Only 10,000 troops were in a position to patrol Baghdad.] By comparison, New York City has a force of 38,000 police and it, despite some depiction in the movies, is not a war zone. But then neither was Baghdad, in a conventional sense, the war was over. The looting and civil disorder that followed were [inappropriate not considered] tasks for the military…

Coalition troops went from hot spot to hot spot , each of which they had to abandon to get to another… It needn’t have been this way, Based on recent experience in the Balkans, a number of studies had made remarkably similar estimates as to the number of troops that would be required to subdue Iraq. NATO had deployed 200 soldiers for every 10,000 civilians. For Iraq, this rough ratio would have meant a stabilisation force of more than 450,000 - three times the number commanded by the Coalition (p.164-165).

The issue in Iraq was not that there wasn't a plan, but that the plan was based on a misconceived idea of war in the 21st Century. The ideas about having more agile, flexible militaries which rely on modern technology such drones is part of this problem: Rumsfeld’s view about how many troops were needed did not come out of nowhere, they were based on believing in the predominance of air power. But this view poses a problem because of the security vacuums that get created.

By way of analogy, the criticism made about information sharing between the CIA and the FBI in the 9/11 Commission Report were based on the idea that we could make a clear distinction between law and strategy, between law and war. You cannot: we are at war with a new force that requires us to blur the lines: wars require maintaining civil order and crimes require military responses.

I have written a review of the Missing Martyrs so wont say much more about it here.

Intended Consequences

Engineering the Financial Crisis - Krausz and J Friedman

I think Jeffery Friedman is one of the most interesting living thinkers. He makes me think really hard about almost everything he writes about. His book on the financial crash puts the cause of the crash to minimum capital regulatory requirements. I think his explanation of the crash is persuasive but its even more important for how I view conflicting viewpoints and public policy.

Briefly, he shows that the capital adequacy requirements led banks to indulge in mortgage backed securities, because it helped them meet their capital requirements more quickly. This was not an act of irrationality, it was not an act of malicious greed: bankers themselves invested in these personally so it cant be said that they expected them to fail. But that’s not the main reason why I love the book and how its been influential. Here are some relevant extracts:

Specifically, the vulgar usage of ‘‘irrationality’’ treats people’s errors as inexplicable... Another way to put the point is that the vulgar usage does not recognize that reality is complex and can produce many different interpretations, each of them plausible to sane, rational people.... Thus, the vulgar notion of irrationality treats accurate and representative ‘‘information’’ about objective reality as if it were there to be had, sans interpretation, by any rational agent, such that behavior that does not take our retrospective interpretation of this information into account must have been due to a lack of rationality—rather than to an absence of accurate, representative information, or the presence of an incorrect interpretation of such information…. To make an error in logic, let alone to be unaware of a fact, is not the same thing as to be irrational (p.50-51)

…we believe that Akerlof and Shiller’s critique of economism is founded on an error in logic: a conflation of irrationality with error. One can be perfectly rational and as unemotional as Star Trek’s Mr. Spock, yet make a mistake in thinking that a given action will, indeed, be instrumental to one’s desired end (p.125).

This has incredibly important implications. First, I treat people who make conflicting political arguments as though they are rational. I may believe they are wrong, but I try make sure that its extremely rare where I believe someone is being unreasonable. My view on the minimum wage for example, is that its bad for employment, bad for prices, and reduces immigration which is bad for productivity and GDP. I don't hold, for example, Owen Jones as being unreasonable because he has a different view. The idea is linked to the premise that the political should not be personal or emotional. It should be a dialogue about competing ideas.

Second, and Friedman probably wouldn’t agree, it has implication for democratic government. The Caplan-esque argument is that the typical voter is “irrational” and so shouldn't be trusted. But Caplan here is making the same mistake: wrongness is not the same as rationality. The complexity that we see should lead us to being humble about certain views. Again, we are not talking about how right an idea is, we are talking about how to deal with it.

Third, the propensity to attribute malicious motives to people with different views (“he’s funded by Exxon” or “he’s evil”) is a weakness in political thought. It assumes you've already made the jump from X-view to malice without appreciating that the person with a different view could just be wrong. It assumes there is no reasonable reason for disagreeing with you. I voted Remain, but I wouldn't attribute evil, malicious funds or even irrationality to Leave voters without more evidence.

Methodology

Language, Truth and Logic - A J Ayer / Reconstruction of Automobile Destruction: An Example of the Interaction between Language and Memory, Elizabeth Loftus and John Palmer, Journal of Verbal Learning and Verbal Behaviour (1974).

I have spent a number of posts explaining why I have a strong aversion to narrative journalism. Journalists will write entire articles without mentioning a single study - and it really irks me. In my posts, I try to make sure that every single statement is backed by a study, and I draw people’s attention to anything that is not supported by data. This view comes from my early adherence to logical positivism.

I’m a bit of a fundamentalist when it comes to this - I have said that if there isn't a study in your article, it probably shouldn't be published; I even held the view that personal testimony should be removed from court rooms. The unreliability of eye witness testimony, the claims of the religious to have had personal encounters with ghosts, Gods and other assorted gremlins belies its importance. Loftus’ study was the first study I read during my A Levels that led me to this view; subsequent meta-analysis have confirmed their findings.

I recently had a discussion with Sam where he disagreed with this view - his view was that where there was no data, anecdotes could be used. I disagree. Conflicting anecdotes, the infallibility of the human mind, the fact that n=1, and biases lead me to refuse to give any weight to any anecdotes.

Other Economic

The Great Recession: Market Failure or Policy Failure? - Robert Hetzel